Difference Between ODM and OEM

Both the terms ODM and OEM are related to the manufacturing industry. ODM stands for Original Design Manufacturing, and OEM refers to Original Equipment Manufacturing. It is quite confusing to see the difference between the two, as they are very similar.

OEM refers to a company or a firm that is responsible for designing and building a product according to its own specifications, and then selling the product to another company or firm, which is responsible for its distribution. The one company produces products on behalf of another company, after which the purchasing company markets the product under its own brand name.

An ODM company or firm, on the other hand, is responsible for designing and building a product as per another company’s specifications.

So then, OEM companies design products as per their own specifications, whereas ODM companies design products as per other company’s specifications.

An advantage of OEM is that the purchasers can obtain products without setting up a factory. In a sense, OEM helps the purchasing companies to lower their production costs.

Summary:

1. ODM stands for original Design Manufacturing, and OEM refers to Original Equipment Manufacturing.

2. An OEM company is responsible for designing and building a product according to their own specifications, and then selling the product to another company or firm, which is responsible for its distribution. An ODM company or firm is responsible for designing and building a product as per another company’s specifications.

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Yeah I think this page has it wrong. From reading various definitions it seems that:

OEM= the manufacturer builds a product based on your complete design ONLY for your brand.

ODM= the manufacturer CREATES a new design for you and manufactures it for you. The manufacturer holds the copyright to the design and thus is allowed to sell and manufacture it for others as long as it doesn’t have your branding on it. I guess you can buy the design from them and at that point they become an OEM.

People refer to rebranding an already existing product as OEM, but it seems that a better term would be reselling, value added reselling, or private labelling.

I work in the e-cig and vaporizer industry where both are used quite frequently. The best way to think about it:

If you want to slap your label on an already existing product, you can do OEM with a factory. The problem is, everyone is able to buy and sell this product, and slap their branding on it just the same. This is why you’ll see tons of e-cigs that are almost identical, save for the band name.

ODM is much more desirable. With ODM, you get a factory to make your product. You own the product, and no one else can make it without licensing it from you.

OEM = only the branding is exclusive. You can trademark it.
ODM = the product is exclusive. You can patent this.

I’ve been working in a industry that produce OEM products for the last 10 years. Occasionally we make a ODM product as well. Your explanation about the differences between ODM and OEM are accurate and crystal clear to me.

I think you did a great job of explaining the differences. From my personal experience in the e-commerce industry, I’ve noticed that many people do not understand the difference. For example, I run an ecommerce vape store called http://vaporizerchief.com and we actually have a few of the brands that have the same design because they are OEM products. People will often ask us to explain the difference between these products without realizing there is no difference because it is not an original design.

An OEM company develops a product for it’s customers with it’s own standards and specifications. Then sells the product to another Company for sales and marketing of the product…It may provide help in sales or marketing and after sales services as per agreement.
It means that the original Idea (design) of a product belongs to the manufacturing company.

While an ODM company develops product on it’s customer’s requirement (demand) with customer’s (selling company) standards & specifications.
It means that the original Idea belongs to the selling company on it’s required standards and specifications.

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Written by : Prabhat S.
and updated on March 9, 2012

Articles on DifferenceBetween.net are general information, and are not intended to substitute for professional advice. The information is "AS IS", "WITH ALL FAULTS". User assumes all risk of use, damage, or injury. You agree that we have no liability for any damages.
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